The Brits have the 5th equal most free economy in the world, but without their high government interference, they’d have the freest big economy. Sadly, the man responsible for this is set to take over from Blair.
This week the Heritage Foundation and WSJ published their 2007 ratings of economic freedom, and as usual Anglo nations and their ex-colonies came top. The economic freedom metric is an equally weighted average of these 10 measures:
- Business freedom is the ability to create, operate, and close an enterprise quickly and easily. Burdensome, redundant regulatory rules are the most harmful barriers to business freedom.
- Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and exports of goods and services.
- Monetary freedom combines a measure of price stability with an assessment of price controls. Both inflation and price controls distort market activity. Price stability without microeconomic intervention is the ideal state for the free market.
- Freedom from government is defined to include all government expenditures—including consumption and transfers—and state-owned enterprises. Ideally, the state will provide only true public goods, with an absolute minimum of expenditure.
- Fiscal freedom is a measure of the burden of government from the revenue side. It includes both the tax burden in terms of the top tax rate on income (individual and corporate separately) and the overall amount of tax revenue as portion of GDP.
- Property rights is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state.
- Investment freedom is an assessment of the free flow of capital, especially foreign capital.
- Financial freedom is a measure of banking security as well as independence from government control. State ownership of banks and other financial institutions such as insurer and capital markets is an inefficient burden, and political favoritism has no place in a free capital market.
- Freedom from corruption is based on quantitative data that assess the perception of corruption in the business environment, including levels of governmental legal, judicial, and administrative corruption.
- Labor freedom is a composite measure of the ability of workers and businesses to interact without restriction by the state.
The top nations are:
The Brit score is depressed by its low score for Freedom from Government – way below that of all other Anglo nations, and the same as Germany and Botswana. If the Brits were as free as their Irish neighbors, their score would rise to 83.4 and their world ranking to third.
Chancellor Brown, the guy responsible for Brit’s lack of freedom, expects soon to run the UK.
Incidentally, the US Property Rights score hasn’t been dented by Kelo, so presumably the bar is low.